T-Rex Property AB v. Cedar Fair, L.P.

Filing 37

MEMORANDUM OPINION AND ORDER denying 19 Motion to Dismiss/General (Written Opinion). Signed by Judge Donovan W. Frank on 06/02/2017. (RLB)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

T-Rex Property, AB,

Civil No. 16-2018 (DWF/BRT)

Plaintiff,
v.

MEMORANDUM
OPINION AND ORDER

Cedar Fair, L.P.,
Defendant.

David P. Swenson, Esq., and Peter Thomas, Esq., Farney Daniels PC, counsel for
Plaintiff.
Bryan A. Schwartz, Esq., and Steven M. Auvil, Esq., Squire Patton Boggs (US) LLP;
and Kathryn N. Hibbard, Esq., Greene Espel PLLP, counsel for Defendant.

INTRODUCTION
This matter is before the Court on a Motion to Dismiss brought by Defendant
Cedar Fair, L.P. (“Cedar Fair” or “Defendant”) (Doc. No. 19). For the reasons set forth
below, the Court denies the motion.
BACKGROUND
This is a patent infringement case involving U.S. Patent No. RE39,470 (the “’470
Patent”), entitled “Digital Information System”; U.S. Patent No. 7,382,334 (the “’334
Patent”), entitled “Digital Information System”; and U.S. Patent No. 6,430,603 (the “‘603
Patent”), entitled “System for Direct Placement of Commercial Advertising, Public

Service Announcements and Other Content on Electronic Billboard Displays”
(collectively, the “Patents-in-Suit”). (Doc. No. 1 (“Compl.”) ¶¶ 27-76 & Exs. A-C.) 1 On
June 20, 2016, Plaintiff T-Rex Property AB (“T-Rex” or Plaintiff”) sued Cedar Fair for
infringement of certain claims of the Patents-in-Suit. In lieu of filing an answer, Cedar
Fair moved to dismiss the Complaint under Federal Rule of Civil Procedure 12(b)(6),
arguing that each claim of the Patents-in-Suit is invalid under 35 U.S.C. § 101 and, in
particular, under Alice Corp. Pty Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014).
A.

The Parties
T-Rex is a Swedish corporation founded by Mats Hylin and Mats Dahlgren, two of

the named inventors of the ’470 Patent and the ’334 Patent. T-Rex is involved in the
field of digital signage, which is an alternative to physical advertising, such as advertising
using paper copy on billboards.
Cedar Fair operates regional amusement and resort parks. (Compl. ¶ 5.) In its
Complaint, T-Rex alleges that Cedar Fair operates devices and systems, including its
“FunTV network of digital screens that are located throughout the guest areas of its
amusement parks, including ride and restaurant queues and in high traffic areas,” that
infringe the asserted claims. (Compl. ¶¶ 30, 50, 68.)

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The ’470 Patent is a reissue of U.S. Patent No. 6,005,534 (the ’534 Patent) (not
asserted in this case); the ’334 Patent is a continuation-in-part of the ’534 Patent. The
’603 Patent is not part of the same family as the ’470 Patent and ’334 Patent.

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B.

The Patents-in-Suit
Each of the asserted patents generally relates to digital information systems for

displaying information on at least one display means, such as a screen, projector, or
electronic billboard. (See, e.g., ’334 Patent at Abstract; ’470 Patent at Abstract.) T-Rex
asserts that the inventions reflected in the Patents-in-Suit are aimed at addressing an
unmet need among advertisers for increased speed, flexibility, and the ability to
dynamically change digital messages. In addition, T-Rex asserts that the Patents-in-Suit
are directed to a concrete system for collecting display instructions from external content
providers, organizing the display content at a central computer, and then displaying the
content on electronic displays such that mediators are able to dynamically control the
displays in real time.
1.

The ’470 Patent

The ’470 Patent is directed to a digital information system (method and apparatus)
for displaying information in places frequented by the general public, such as railway
stations, subway stations, and airport waiting areas. (’470 Patent at c. 1, ll:15-25.) The
patent identifies a problem with static display systems that are used and controlled on the
display site and where the information displayed cannot be updated or changed quickly.
(Id. at c. 2, ll:5-33.) The ’470 Patent, in contrast, is directed to a “flexible system” that
allows for the control, in real time, of the display of “pictures, images, messages and
announcements to be configured in accordance with modern digital technology, therewith
providing rapid communication.” (Id. at c. 2, ll:40-52.) A further object of the invention
is to enable information to be changed as often as desired, in real time, and in places that
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are mutually far apart. (Id. at c. 2, ll: 50-55.) To achieve this end, the alleged invention
of the ’470 Patent operates via a central computer that is divided into three servers, one of
which receives information from “external information mediators,” via modems. (Id. at
c. 6, ll:65-67.) An “information mediator” might be, for example, an advertising agency
who wishes to use the system for commercial purposes. (Id. at c. 5, ll:18-21.) The
central computer uses instructions received by the “information mediator” to send to the
displays. (Id. at c. 7, ll:1-9.) In this action, Plaintiff asserts claims 25 and 26 2 of the ’470
Patent, which read as follows:
25. A method of selectively displaying digital information at
one or more of a plurality of locations, said method comprising:
receiving control instructions from at least one external
information mediator;
using said control instructions to generate an exposure list, said
exposure list specifying three or more of the following items:
i) what information content is to be displayed;
ii) at which of said plurality of locations said information
content is to be displayed;
iii) when said information content is to be displayed for each
location at which content is to be displayed; and
iv) how long said information content is to be displayed for each
location at which content is to be displayed;
displaying images at one or more of said locations in accordance
with said exposure list; and
permitting said exposure list to be dynamically updated.
26. A system for selectively displaying digital information at one
or more of a plurality of locations, said system comprising:
a computerized control center having a plurality of
communication interfaces for receiving control instructions
from at least one external information mediator, said
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T-Rex points out that it has not yet been required to submit Infringement Claim
Charts, and that it expects to identify at least the claims identified in the Complaint.

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computerized control center including means for generating
and dynamically updating an exposure list from said control
instructions, said exposure list specifying three or more of the
following items;
i) what information content is to be displayed;
ii) at which of said plurality of locations said information
content is to be displayed;
iii) when said information content is to be displayed for each
location at which content is to be displayed; and
iv) how long said information content is to be displayed for
each location at which content is to be displayed;
a computerized device situated at each one of said plurality of
locations, each computerized device being electronically coupled
to said computerized control center; and
a means for displaying images in accordance with said exposure list
associated with each one of said computerized devices.
(’470 Patent at claims 25, 26.) The method claim 25 cites four limitations: (1) the
receipt of instructions from a company or private individual; (2) the use of the received
instructions to generate an exposure list that contains what information to display, as well
as where, when, and how long to display the information; (3) the display of information
in accordance with the exposure list; and (4) the updating of the exposure list
dynamically. Claim 26 recites a system comprised of a central computer, a computerized
device at the display location, and a means for displaying images (i.e., a projector) that
implements the method steps of claim 25.
2.

The ’334 Patent

The ’334 Patent is a continuation-in-part of the ’470 Patent, with the relevant
difference being that the’334 Patent’s description of the invention explains that the
information to be displayed is sent to televisions or cameras to be displayed in cinemas,
private homes, on-board aircrafts, and on-board trains, etc. (’334 Patent at c. 1, ll:

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12-24.) The ’334 Patent describes a system “comprised of a control center 12 having a
communication interface 14 which connects an unlimited number of computerized
devices 16, 18, 20, which are placed at desired distances from one another for the control
of television sets 40 or cameras 22.” (‘334 Patent at c. 5, ll:59-63.)
Plaintiff asserts claims 22 and 32 of the ’334 Patent, which read as follows:
22. A method of coordinating and controlling electronic displays
in a digital information system for exposing information on at least
one display device through the medium of at least one electronic
display, characterized in that it comprises the following steps:
generating an exposure list comprising control instructions for
coordinating and controlling electronic displays with regard
to what shall be exposed, when it shall be exposed, where it
shall be exposed and for how long it shall be exposed;
using a control center for coordinating and controlling electronic
displays, wherein the control center is able to create and
update said exposure list in real time with control instruction
fields via dynamic booking of information in time for
exposure from mediators; and
wherein the exposure list enables each electronic display to be
controlled, independently of other electronic displays, to
receive the same or different information in accordance with
the exposure list for exposure of respective electronic display.
32. An arrangement for coordinating and controlling electronic
displays in a digital information system for displaying information
on at least one display device through the medium of at least one
electronic display, said information being supplied by mediators of
information, for exposure or display, characterized in that it
comprises:
computerized control center means, wherein the control center
has communication interfaces against;
computerized means for coordinating and controlling electronic
displays;
exposure handler means whereby the control center functions, in
real time and through the medium of said exposure handler, to
create and update an exposure list having control instruction
fields, via dynamic booking of display information from
mediators; and
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wherein said exposure list, containing control instructions,
coordinates and controls the electronic displays in question
with respect to what shall be exposed, where it shall be
exposed, when it shall be exposed, and for how long it shall
be exposed, and enables each electronic display
independently of other electronic displays, to receive the
same or different information according to the exposure list
for exposure or display by respective electronic display.
(’334 Patent at claims 22, 32.)
3.

The ’603 Patent

The ’603 Patent purports to solve problems with outdoor advertising such as “cost,
single message content, [and] lack of content changeover capability” of conventional
billboards by providing a system and method that permits “commercial advertisers, such
as consumer product companies and the advertising agents that represent them, [to]
directly access a network of multiple large, high resolution electronic displays located in
high traffic areas and directly send their own advertisements electronically to the network
to be displayed at locations and times selected by the advertisers.” (’603 patent at c. 1,
ll:44-45-c. 1, ll:66-c. 2, ll:5.)
Plaintiff asserts claims 42 and 43 of the ’603 Patent, both of which are dependent
on claim 13:
13. A system for presenting video or still-image content at
selected times and locations on a networked connection of multiple
electronic displays, said system comprising:
a network interconnecting a plurality of electronic displays
provided at various geographic locations;
means for scheduling the presentation of video or still-image
content at selected time slots on selected electronic displays
of said network and receiving said video or still-image
content from a content provider;

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transmission means in communication with said receiving means
for communicating scheduled content to respective server
devices associated with corresponding selected electronic
displays of said network, each said associated device
initiating display of said video or still-image content at
selected times on a corresponding selected electronic display
of said network.
...
42. The system of claim 13, further including means for
enabling split screen images to be displayed at the electronic display.
43. The system of claim 42, wherein said split screen capability
is utilized to present a still image portion of the image in one display
area, and one of real time video, near real time video, or still frame
in a second display area.
(’603 Patent at claims 13, 42, 43.) Claim 42 adds the limitation of split screen capability
to claim 13. Claim 43 adds the limitation of the ability to display video on one portion of
the split screen and a still image on the other side of the split screen.
DISCUSSION
I.

Legal Standard
In deciding a motion to dismiss pursuant to Rule 12(b)(6), a court assumes all

facts in the complaint to be true and construes all reasonable inferences from those facts
in the light most favorable to the complainant. Morton v. Becker, 793 F.2d 185, 187 (8th
Cir. 1986). In doing so, however, a court need not accept as true wholly conclusory
allegations, Hanten v. Sch. Dist. of Riverview Gardens, 183 F.3d 799, 805 (8th Cir.
1999), or legal conclusions drawn by the pleader from the facts alleged, Westcott v. City
of Omaha, 901 F.2d 1486, 1488 (8th Cir. 1990). A court may consider the complaint,
matters of public record, orders, materials embraced by the complaint, and exhibits

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attached to the complaint in deciding a motion to dismiss under Rule 12(b)(6). Porous
Media Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir. 1999).
To survive a motion to dismiss, a complaint must contain “enough facts to state a
claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,
545 (2007). Although a complaint need not contain “detailed factual allegations,” it must
contain facts with enough specificity “to raise a right to relief above the speculative
level.” Id. at 555. As the United States Supreme Court reiterated, “[t]hreadbare recitals
of the elements of a cause of action, supported by mere conclusory statements,” will not
pass muster under Twombly. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing
Twombly, 550 U.S. at 555). In sum, this standard “calls for enough fact[s] to raise a
reasonable expectation that discovery will reveal evidence of [the claim].” Twombly, 550
U.S. at 556.
Where a motion to dismiss is based on a claim of patent ineligible subject matter,
dismissal will generally be unwarranted unless the “only plausible reading of the patent
must be that there is clear and convincing evidence of ineligibility.” JSDQ Mesh Techs.
LLC v. Fluidmesh Networks, LLC, Civ. No. 16-212, 2016 WL 4639140, at *1 (D. Del.
Sept. 6, 2016) (emphasis in original); accord Ultramercial, Inc. v. Hulu, LLC, 722 F.3d
1335, 1339 (Fed. Cir. 2013), vacated sub nom. WildTangent, Inc. v. Ultramercial, LLC,
134 S. Ct. 2870 (2014). In a patent case, success on a motion to dismiss is made more
difficult by the presumption of validity that attaches to patents. See 35 U.S.C. § 282(a)
(“A patent shall be presumed valid . . . [and t]he burden of establishing invalidity of a
patent or any claim thereof shall rest on the party asserting such invalidity.”). While not
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all courts have extended this presumption to challenges of validity under § 101, the Court
agrees with the decisions that have applied the statutory presumption of validity. See,
e.g., Proto Labs, Inc. v. Ico Products, LLC, Civ. No. 15-2562, 2016 WL 4974951, at *5
(D. Minn. Sept. 16, 2016) (citing cases and applying the statutory presumption of
validity).
Under § 101, the range of patentable subject matter includes “any new and useful
process, machine, manufacture or composition of matter, or any new and useful
improvement thereof.” 35 U.S.C. § 101. Despite the broad language of § 101, “laws of
nature, natural phenomena, and abstract ideas are not patentable.” Mayo Collaborative
Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1293 (2012) (citation omitted). The
Supreme Court has developed a two-part test to distinguish between patents that “claim
laws of nature, natural phenomena, and abstract ideas from those that claim
patent-eligible applications of those concepts.” Alice, 134 S. Ct. at 2355. First, a
reviewing court determines whether the patent or patents at issue “are directed to a
patent-ineligible concept.” Id. If the patents are so directed, then the court must move to
step-two and “consider the elements of each claim both individually and ‘as an ordered
combination’ to determine whether the additional elements ‘transform the nature of the
claim’ into a patent-eligible application.” Id. (quoting Mayo, 132 S. Ct. at 1297, 1298).
The second step has been described as a “search for an inventive concept—i.e., an
element or combination of elements that is sufficient to ensure that the patent in practice
amounts to significantly more than a patent upon the ineligible concept itself.” Id.
(quotations omitted). The two steps are related and often involve overlapping scrutiny of
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the content of the claim: the first-step looks at the “focus” of the claim, its “character as
a whole,” and the second-step (where reached) looks more precisely at what the asserted
claim elements add—specifically, whether the elements identify an “inventive concept”
in the application of the ineligible matter to which the claim is directed. See Elec. Power
Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1353 (Fed. Cir. 2016) (citing Enfish, LLC v.
Microsoft Corp., 822 F.3d 1327, 1335-36 (Fed. Cir. 2016)).
II.

Discussion
Cedar Fair argues that the asserted claims of the Patents-in-Suit are not directed to

patent eligible subject matter and are, therefore, invalid under § 101 and fail the Alice
test. First, Cedar Fair argues that the claims at issue are all directed to the abstract idea of
collecting display instructions from a third party, organizing the display content at a
central computer, and then displaying the content on conventional electronic displays.
Cedar Fair points out that a patent claim may be abstract if it is directed at “a
fundamental economic practice,” a “method of organizing human activity,” or a
“longstanding,” “routine,” or “conventional” practice. See Alice, 134 S. Ct. at 2356; see
also Bilski v. Kappos, 561 U.S. 593, 611-12 (2010). Cedar Fair further argues that the
claimed limitations encompass both fundamental economic practices (advertising on a
digital medium) and basic methods of organizing human activity (notifying flight
passengers of departures). See, e.g., Elec. Power Grp., 830 F.3d at 1354 (holding on
summary judgment that claims directed to the “process of gathering and analyzing
information of a specified content, then displaying the results” without “any particular
assertedly inventive technology for performing those functions” are abstract). Cedar Fair
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submits that limiting the alleged inventive idea here to the field of digital signage or
advertising does not save it from abstraction and that using language associated with
computers (such as “control instructions” and “control center”) does not alter the abstract
nature of the claims. Finally, Cedar Fair maintains that, moving to the second step of
Alice, the steps and components recited in the claims of the Patents-in-Suit do not add an
inventive component sufficient to transform the abstract idea into one that is
patent-eligible. Specifically, Cedar Fair asserts that each step of the asserted claims
recites a purely conventional computer functionality and that the steps simply claim a
series of limitations that recite generic steps of controlling, coordinating, and displaying
digital signage.
T-Rex disagrees and argues that it has provided a “uniquely-detailed” Complaint
setting forth how the claimed invention satisfies the underlying considerations of Alice,
including attached declarations and technical exhibits to establish the state of the art at
the time of the invention, the problem to be solved, and the technical innovations of the
invention. T-Rex also argues that Cedar Fair offers a broad and inaccurate description of
the asserted claims and submits instead that the Patents-in-Suit are not limited to merely
an abstract idea and, even if they were, they would satisfy the second Alice step. T-Rex
maintains that taking the uncontested facts in the pleading to be true and construing all
reasonable inferences in its favor leads to a conclusion that the presumptively-valid
claims of the Patent-in-Suit relate to patent eligible subject. Specifically, T-Rex asserts
that the system and method claims of the Patents-in-Suit: relate to coordinating and
controlling electronic displays and describe specific interconnected hardware and
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software—“computerized control center means” and “exposure handler means”—along
with the actual physical displays screens (see ’334 Patent, claim 32); require “a
computerized control center” plus a separate connected “computerized device situated at
each” location where a physical sign is coordinated and controlled to display information
(see ’470 Patent, claim 26); and claim a geographically dispersed network of digital
signage, interconnected with concrete transmission, with claims adding the coordinated
scheduling of split-screen images and real-time video (see ’603 Patent, claims 13, 42,
43).
T-Rex also argues that the asserted patent claims plausibly include additional
meaningful limitations so as to satisfy step-two of Alice. In support, T-Rex argues that its
invention arose in 1996 when the inventors came up with a solution to resolve particular
problems with the way advertisements and certain other information could be presented
to the public and that the invention specifically addressed the problem of a lack of
coordination, as well as the inability to control items individually and dynamically.
T-Rex further submits that the solution described in the Patents-in-Suit includes a
concrete combination of devices, interfaces, and software, that when networked together
to create physical displays, solve the above-identified problems.
Here, the parties appear to be in agreement that the asserted claims are directed to
a method and system for a third party (such as an advertiser or an airline) to display
targeted information (advertisements or airline schedules) on an electronic display in
accordance with instructions specifying the location and time of the display. (See, e.g.,
’470 Patent at c. 1, ll:27-31; ’334 Patent at c. 5, ll:33-45; ’603 Patent at c. 2, ll:16-18.)
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While the Court finds some merit to Cedar Fair’s position that the patents are directed to
an abstract idea, the Court also concludes that under step two of Alice, T-Rex sufficiently
alleges and demonstrates, at this early stage in the litigation, that the patent claims set
forth concrete ordered combinations of elements that plausibly transform the claimed
subject matter (and any conventional computer technology) into an inventive concept,
particularly when viewed in light of what was considered conventional at the time of the
invention. Moreover, the Court notes that at this early stage, no discovery has occurred
and no experts have been engaged or deposed. Viewing the allegations in the Complaint
in the light most favorable to T-Rex and construing all reasonable inferences in T-Rex’s
favor, the Court has no basis on which to disagree with the allegations made by T-Rex,
particularly at the motion-to-dismiss stage. That, combined with the presumed validity of
the Patents-in-Suit, Cedar Fair’s motion is properly denied. However, that being said, the
Court does not foreclose the possibility that Cedar Fair could be successful in challenging
the validity of the patents at the summary judgment stage. It is entirely possible that,
after discovery and further development of the record, Cedar Fair will be successful in
demonstrating that the asserted claims are invalid. 3

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The Court’s decision is in line with other cases where § 101 invalidation
challenges have been denied at the motion-to-dismiss stage. See, e.g., Bascom Global
Internet Servs. v. AT&T Mobility LLC, 827 F.3d 1341 (Fed. Cir. 2016); McRO, Inc. v.
Bandai Namco Games Am. Inc., 837 F.3d 1299 (Fed. Cir. 2016).

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ORDER
Based upon the foregoing, IT IS HEREBY ORDERED that Defendants’ Motion
to Dismiss (Doc. No. [19]) is DENIED.

Dated: June 2, 2017

s/Donovan W. Frank
DONOVAN W. FRANK
United States District Judge

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